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ACCA Applied Skills · Corporate and Business Law (Global) · Obligations of the seller and buyer, and provisions common to both

Under the CISG, Kestrel Ltd has agreed to buy goods from Onyx Co. Before the delivery date, Onyx informs Kestrel that it will definitely not deliver. Kestrel wishes to treat the contract as ended. Which statement is correct?

Kestrel may declare the contract avoided now. Under the CISG, where it is clear before the performance date that the other party will commit a fundamental breach, avoidance is allowed. A definite refusal to deliver makes this clear, so waiting is unnecessary.

  1. AKestrel may declare the contract avoided if it is clear before the date for performance that Onyx will commit a fundamental breachCorrect
  2. BKestrel may avoid the contract only after the delivery date has passed and a further grace period has expired
  3. CKestrel may only claim damages and must keep the contract alive until the delivery date

Explanation

The CISG permits a party to declare the contract avoided if, prior to the date for performance, it is clear that the other party will commit a fundamental breach. A clear refusal to deliver is such a case. Waiting for the delivery date is not required.

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